Keywords Studios buys Liquid Development for $9m

Keywords Studios has acquired a US-based provider of outsourced art services for the video games industry, Liquid Development, for $9m.

AIM-listed Keywords, which provides language translation and other technical services to the video games industry, said the deal is in line with its strategy of growing both organically and by acquisition.

It said art outsourcing was a key area for expansion given the current buoyant market for the creation of art assets.

Keywords’ chief executive Andrew Day said: “The acquisition of Liquid Development significantly increases the scale of our art services business line, giving us greater penetration of this large and strongly growing market as well as increased access to this early entry point in the video games development cycle.”

Under the terms of the acquisition, which is expected to be earnings-enhancing in the first full year of ownership, Keywords will pay $9m to Liquid Development’s three owners, all of whom will remain with the company after the acquisition.

The amount will be satisfied by $6.3m in cash funded from the group’s existing resources, as well as the issue of 1.07m new shares in Keywords at 160.32p.

Liquid Development is on track to post annual revenues of $7.5m and pre-tax profit of $1.5mn for the year ended December 2015. Last year, it recorded revenues of $5.7m and pre-tax profit of $0.8m.

At 0925 BST, Keywords shares were up 1.5% at 161.40p.